India Intelligence Report



   NK Warns Second Nuclear Test

  US Treasury officials resumed dialogue with Pyongyang

As US Treasury officials resumed dialogue with Pyongyang in Beijing, North Korea (NK) sounded impatient when it warned that it will test another nuclear device if Washington does not quickly resolve its financial dispute.

US Deputy Assistant Treasury Secretary Daniel Glaser revealed that his talks with NK was progressing slowly and that they had only now "established a framework" for further negotiations. Glaser also said that the US Secret Service presented NK officials with evidence of systematic currency counterfeiting, money laundering, and drug trafficking perpetrated by the communist regime. It specifically cited Macau's Banco Delta Asia of helping NK and forced it to freeze USD 24 million that belonged to NK.

However, reports suggest that NK dismissed the evidence as insufficient and would bring up its frustration in the six nation talks scheduled February 8 in Beijing with announcement for "another test." China is playing a constructive role in bringing the parties together but does not seem to be taking the leadership to take the dialogue further. Earlier two engagements failed to reach any settlement.

South Korea, one of the six nations in the dialogue process, pins all progress in the dialogue to a resolution of differences on the financial side. NK views the financial restrictions as an "insult" and a challenge to its sovereignty. The resolution of the financial disagreement is seen as an equalizer that will bring Pyongyang as an equal to the joint dialogue. Otherwise, NK sees itself as being part of an inquisition.